A recent CNN Money article offered alternatives for e-commerce business owners that are “sick of PayPal”. Service descriptions from the article and the vendor websites were revealing, and not in a good way:
- Digital River charges a $1 fee per transaction, more than 3 times PayPal’s transaction fee
- 2Checkout.com charges a setup fee (PayPal doesn’t), has a commission fee almost twice PayPal’s, and always holds 5% of your sales in reserve
- AlertPay charges a fee to transfer funds to your bank (PayPal does this for free), and charges 25% more than PayPal to cut you a check.
- TrialPay undermines your product’s value by optionally making it a free bonus for some other vendor. You get paid by the other vendor, but at what cost to you in the long run?
- And while e-Junkie is a stellar shopping cart, why is it listed in the article among the payment processors?
Seriously? Those payment processors may be options for folks who are sick of PayPal, but I would have to be fatally furious to trade PayPal in for someone who charged higher fees and higher commissions, held onto my money, or charged fees whether the funds were coming or going.
I’ve got nothing but love for PayPal, because:
- I have instant access to my money
If someone pays me at 12:35pm, I can spend that money at 12:36pm. No waiting for a monthly payment, like with TrialPay. PayPal could and would (and should) hold the funds if they felt the transaction was high-risk or atypical, but they don’t hold a portion of my earnings by default. - It’s easy and free to withdraw funds
Did you know PayPal offers a debit card? And there are no transaction fees when used for purchases. Also, they’ll deposit funds into any of my bank accounts for free, as often as I like. Again, no waiting for a monthly payment. - Their commissions are the lowest I’ve seen
And their commission decreases as your sales volume increases. - No setup or monthly fees for standard accounts
Only the higher-end business accounts charge a monthly fee, and the features are well worth the $30 per month. Only the Payflow Gateway accounts charge a setup fee. - It has 164 million accounts worldwide
If I could only convince each account holder to give me $1…or a Euro…or a British Pound (PayPal supports transactions in 17 currencies) - I have options
There are 138 compatible shopping cart applications to choose from. - It will endure
Banks collapse and regimes fail, but PayPal belongs to eBay…and eBay is (probably) forever.
Et tu? What payment processor do you use to buy and sell online?
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What about security? A purchaser doesn’t need to enter CC numbers. A big confidence booster. And a significant obstacle to purchase removed.
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Hi James, and welcome!
And yup, that’s totally true, not exposing your credit card number is one of PayPal’s most effective features for consumers. And clearly folks are buying into it (no pun intended), to the tune of 164 million accounts.
I love ‘em, but not for that. I go for the big guns if I’m unsure of a website: a single-use credit card number with a set spending limit!
I think TrialPay still has some value. If your customer is willing to pull out his wallet to pay you, then PayPal is great. What if your customer is on the fence about your product? It seems TrialPay could monetize those folks, by convincing them to open their wallets for something they definitely want, and for you to benefit monetarily for sending a great lead to one of the TrialPay advertisers.
It’s nice to see such a positive review! I heart PayPal too but it gets so much bad press from the small minority who have problems with it. I’m bookmarking this post to show to any of my clients who are dubious about using it on their sites.
Another point in PayPal’s favour - it’s ridiculously simple to set up compared with some of the other solutions mentioned. You can have products on your website in less than 15 minutes. I design websites for musicians who are generally selling 2-3 items on their sites and it saves them a fortune in set-up costs.
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MoneyBookers is another option - I don’t really know how they compare though. The only reason I found out about them is because they let somebody else use my card fraudulently to fund their account - Security can’t be that good!
The first few points sum it up for me. PayPal is great and has never let me down. Security and service are good and at a reasonable price.
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I’ve used PayPal for years but every now and then I get someone who acts like I suggested having sex with their mother as payment.. there are people out there who are just full of crazy hatred for it..
http://www. paypalsucks.com will give you some idea of the venom..
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Hi Tony, and welcome!
I’ve bumped into a couple of those folks also, and really don’t understand their disgust. Anger or frustration, sure…but disgust?
An interesting site, that. The list of PayPal’s policy “sins” on the home page doesn’t look much different than my banks’ policies. I’m not sure why PayPal is being singled out. Did you see the site has Sucks forums for Citibank, PayPal, eBay, and Stormpay?
It troubles me that someone’s gift to the Web is a place for people to feed their hatred. Not a site to inspire change or collaborate to build something better, but a place to endlessly bitch. The pride in their placement on Forbes.com “Top 10 Corporate Hate Sites” is also worrying me. The existence of that list has diminished my respect for Forbes, also.
Great link…much to think about!
Hi Jonathon, and welcome
TrialPay has heaps of value for vendors with a single product and no desire/need to either develop a relationship with the customer or prep an upsell. If a vendor believes customers are unlikely to ever buy from them, then TrialPay offers a good deal.
My concern is for vendors with product collections and those who are building a customer base for a marketing funnel. For them, it smells like TrialPay downgrades their product to swag, maybe making future sales even less likely.
Would a customer return to buy other products if they got something for free last time? Even if they loved the product-turned-freebie, what would compel them to spend more on a next-level product?
IMO, vendors that are confident their site visitors will eventually buy from them would be better off using those pop-unders for a newsletter sign-up or a single question, multiple-choice (with option to write in) survey on “why didn’t you buy”. I’ve seen both of those in practice, and appreciated both the opportunity to continue with the vendor later, and the opportunity for feedback.
But TrialPay is certainly tempting. Signing up for their service is far easier than improving site design, simplifying purchase processes, or testing sales letters to get some of those folks off the fence.
Thanks for your comment!
You are correct that PayPal is a great option and has many of the payment options that all other processors have. However, I have been looking into TrialPay lately and believe that it is a great option.
They don’t push their system as a true payment option, however they assist you in monetizing that traffic that maybe wouldn’t pay normally. It is a great marketing scheme to further monetize that 90% of traffic that visits your site, tries your product but never purchases. Basically, they can help you capture that ‘other’ traffic. So it is completly incremental revenue for you. And if you can run promotions using TrialPay such as during holidays, or use it in the uninstall its another great marketing tool. Maybe not as a straight fwd payment option but definatly a great marketing tool and I will be using them soon. Just as many of the top sites on the web do…
Brad
Welcome Fiona!
I was just reading the paypalsucks site that Tony mentioned, and your “small minority who have problems” got me thinking…
Assuming there are 500,000 ticked off customers (which is a heckuva lot), and assuming there are 82 million PayPal account holders (that’s a personal and business account for each person, totaling up to the 164 million accounts PayPal says they have), then guess how small that minority is?
.6% — not even a whole percent. Even 999,999 angry folks is only 1.2%
Which is not to invalidate the value in the voices of a few. But it IS important to maintain perspective on how small that ticked off group of folks is.
And you are so right about the quick and free setup for basic accounts. I bet your clients are thrilled and amazed
Thanks for your comment…and the bookmark!
Welcome Daniel, and what an awful way to be introduced to a company?! Did they handle the situation well? Did you get the money back? They’ve got heaps of account holders, so maybe they’re not all bad?
I visited their site, and I’m not comfortable that their answer to the commission rate question is “depends”
, but I am very interested in their “no chargeback policy” option: merchants don’t need to relinquish funds for fraudulent transactions or when a customer reverses the charge on their credit/debit card—Moneybookers absorbs the loss. Now, that feature costs big: 8% of the sale, compared to PayPal’s 2.9%…but a nice assurance.
Unfortunately, they charge a relative fortune for withdrawals, so even with the chargeback protection, I couldn’t recommend them.
Great resource!
Welcome Brad
Having TrialPay as an option at uninstall is very clever! But I still stand by my earlier comments to Jonathon. TrialPay immediate benefits are valuable (and valued), but it may cost the vendor future sales.
Interesting to get this particular comment from someon with a PayPal email address?
Crystal, yes I should have mentioned that. They were very good at responding to the fraud and refunded my card immediately.
My main concern was that, according to my bank, not all security checks required by UK law were performed.
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@Daniel–A truly valid and critical concern. Good that you could get confirmation about how it should have been done.
Another interesting bit from their site, is they mention purchase security, but I didn’t see diddly about funding security…
Good points here on PayPal - they really have the best overall product offering on the web. One thing I don’t like is the high monthly fees they charge you for setting up a virtual terminal. I think it is about $20 a month regardless of how much you process.
There is another company called ProPay (www.propay.com) that offers a virtual terminal with a variety of pricing options. For businesses with seasonal or lessor volumes they have a $35 per year account with pretty reasonable processing fees.
@Rocky–Hi there, welcome, and hey ProPay looks pretty good!
I think it’s a bit shady they say “no monthly fees” when they plainly have an annual fee, but their Premium and up accounts are very competitively priced. Great resource
They charge a bit for things I’m snarky about, like withdrawals, but I did a bit of math and for the virtual terminal services, it’s cheaper to go with ProPay’s Premium or Premium Plus accounts and live with the annual fee. The Platinum account costs $299 a year vs. PayPal’s Virtual Terminal at $20/mth = $240, so I’d have to check all the features to see which was better.
I still think PayPal is the better deal for someone starting out. The combination of spending limits and annual fee on ProPay’s Basic plan aren’t competitive.
Thanks again, I will keep ProPay in mind…
PayPal is really convenient to receive your commissions from affiliate programs.PayPal takes a fee of every transaction, but it is a lot cheaper than having to exchange a check at the bank.
Hi Tom, and welcome!
That’s an excellent point. PayPal is a lot more convenient than waiting for a check to be delivered, and then trekking to the bank, standing in line, etc.
Paypal is tremendously convenient and most small online operations couldn’t exist without it. I blogged last year
http://thecartblog.com/2007/12/04/getting-the-most-out-of-paypal/
about how you can get interest on your paypal balance and apply to lower your fees if your total monthly receipts are high enough.
@Software Guy — Informative post! I hope I need your advice on leveraging $5000 for a better rate sometime soon
I think paypal is the best out there, but I do worry about their security. Sometimes a little competition keeps a company on it toes. That’s what I hope paypal gets
Hi Kevin—Welcome and thanks for your comment! I (obviously) think they’re great, too, but I also think some competition would do them (and us!) a lot of good. I’ll be doing a post on their top 3-5 contenders very soon.
What worries you about their security?
yeah paypal is a great service
i love pay pal too but becarefull because paypal phising are around always change password at last every 2 month
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oh wow, good list! thanks for posting this. i just recently got into paypal to make my first ebay purchase (a big deal for me), so this is a great resource!
I found paypal very useful - most customers can use it and payments have always been quick and smooth. I find it hard to believe some of these horror stories going around about Paypal.
i just love this pay pal….
it is a very good post…
i found it very interesting and quite helpful…
thanks alot….
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Hello, Very interesting post and i love the pay pal service
The seven reasons for why I heart Pay Pal are exactly true .I admire you for writing this post with true facts.I love such service .
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